The Nature of Sublease Contracts

NDV Law > Philippine Legal Advice > Philippine Legal Advice > The Nature of Sublease Contracts

Say for example you are renting a business space or apartment, not from the owner, but from another lessee. Under the law, you are considered as a sublessee. If the owner of the property tries to enforce the terms of his lease agreement with your lessor, what do you do? Should you respect the lease between your landlord and the owner or merely ask the owner to go talk to your landlord? On the other hand, can you enforce the terms of the sublease upon the owner of the property?

Lease agreements are personal in nature. Under the law, contracts take effect only between the parties, their assigns and heirs, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law.

Res inter alios acta aliis neque nocet prodest. A contract cannot be binding upon and cannot be enforced against one who is not a party to it, even if he is aware of such contract and has acted with knowledge thereof. This is called the principle of relativity of contracts.

The contract of sublease is an agreement between the sublessor and the sublessee only. The original lessor (the owner) stands as a third party therein. He is not bound by the covenants entered into under the sublease agreement. Neither does the sublease affect the efficacy of the contract of lease in any manner. The only exceptions to this rule are: a) the sublessee is bound to the owner as to matters pertaining to use and preservation of the thing leased, and b) the owner may demand from the sublessee all unpaid rentals of the original lessee (your landlord), insofar as it does not exceed the amount of rent due from him, in accordance with the terms of the sublease.

These are the only exceptions to the rule on relativity of contracts which relate to sublease contracts. Thus, only the lessor and the lessee can maintain an action to enforce the obligations arising under the contract between them. Apart from the rights granted to the lessor vis-à-vis the sublessee as provided above, a contract of sublease can neither favor nor prejudice the owner or original lessor.

In fact, the sublessee generally does not have any direct action against the original lessor or owner to require compliance with the obligations of the lessee (your landlord), to invoke any of his rights under the sublease agreement against the lessor, or to make the owner or lessor directly liable to the sublessee because the owner is a complete stranger to the sublease.

If ever a right of action would exist under the sublease agreement, the same should be directed against the sub-lessor and not the original lessor or owner. Finally, owner of leased property cannot be bound or affected by any sublease, and the existence thereof cannot prevent the owner from terminating the original lease agreement when the original lessee (your landlord) has violated its terms.

Nicolas & De Vega Law Offices is a full-service law firm in the Philippines. You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines. You may also call us at +632 4706126, +632 4706130, +632 4016392 or e-mail us at [email protected] .